Think Green – Combating Climate Change

Lenovo is committed to continually reducing the global carbon footprint of all of its business activities. This commitment is demonstrated by developing Lenovo's corporate Climate Change Policy, setting aggressive corporate-wide Climate Change Objectives and Targets, and implementing a long term comprehensive Climate Change Strategy. Management of climate change activities and programs is carried out within the scope of Lenovo's global environmental management system (EMS).

Climate Change Policy

Lenovo's corporate climate change policy was signed by Yuanqing Yang, Chief Executive Officer, on August 6, 2010. This policy applies to all Lenovo's operations and activities.

Lenovo’s climate change strategy focuses on five areas of influence. Lenovo identifies and works with partners in each of these areas to drive and facilitate global, national and local greenhouse gas (GHG) emission reductions.

• Energy suppliers and their operational emissions which are attributable to our activities (Scope 2 emissions),

• Our supply chain and emissions associated with the production and delivery of goods and services to Lenovo (cradle to gate – Scope 3 emissions),

• Our customers and the emissions associated with their procurement, use and disposal of our products (gate to grave – Scope 4 emissions),

• Government, NGO, and public actions in support of transition to a low carbon economy.

Climate Change Objectives and Targets

In accordance with the requirements of Lenovo's EMS, energy consumption, the associated GHG emissions and the resulting climate change impacts have been identified as significant environmental aspects and impacts for the company. To address these significant aspects, the company-wide short term and long term climate change objectives and targets have been established, implemented, and maintained.

Lenovo has been collecting, measuring, and reporting GHG emissions data since 2006. In order to align environmental and financial reporting, beginning April 1, 2009 Lenovo transitions from tracking and reporting energy and climate change data in conjunction with the calendar year to Lenovo's fiscal year (FY – April 1 through March 31). Based upon the recommendation of an external verification carried out during the spring of 2011, Lenovo will change its base year for GHG emissions to FY 2009/10.

As can be seen below, the comprehensive inventory of the Scope 1, 2 and 3 (business travel) emissions was performed for calendar year 2008 (January 1 – December 31), FY 2009/10 and FY 2010/11 (April 1 – March 31).

Lenovo's GHG Emissions

Totals in MT C02-e

CY 2008

FY 2009/10

FY 2010/11

Scope 1

1,468

1,495

1,249

Scope 2

76,621

68,133

61,072

Total Scope 1&2

78,089

69,628

62,321

Scope 3

14,819

15,675

24,316

Total Scope 1&2&3

92,908

85,303

86,637

Note: CY 2008 data is only internal.

Regarding the most recent GHG emissions inventory, Scope 1 (direct GHG emissions) and Scope 2 (indirect GHG emissions) emissions were both reduced. Scope 3 (other indirect GHG emissions) went up significantly due to the increase in business related travel following a year when travel was restricted due to the economic downturn.

To ensure credibility, Lenovo performed the first external verification process of GHG data management, GHG inventory and GHG reductions in May, 2011. The verification statements for FY 2009/10 and FY 2010/11 are available here: FY 2009/10 and FY 2010/11.

Our Operations

In an effort to minimize Lenovo’s climate change impact and reduce its carbon footprint, Lenovo uses local manufacturing facilities in the Americas, Europe and Asia, as well as the lowest carbon shipping methods via truck, rail or sea, where possible. Lenovo is working closely with its shipping partners to ship products responsibly and, in July 2008, was certified by the US EPA SmartWay program for implementing fuel efficient shipping standards. Lighter and smaller products, more compact and reusable packaging materials, bulk shipping alternatives, and regional distribution facilities allow for lighter loads, load consolidation and full truck load shipments. During 2009, Lenovo shifted 7 percent of notebooks from air transport to ocean transport to minimize environmental impacts related to shipping.

During FY 2009/10 and FY 2010/11 Lenovo implemented over 40 energy efficiency projects at the sites around the world. These projects contributed to a near 20% reduction in electricity consumption over this time period. While Lenovo has taken many actions to reduce GHG emissions, complete data is not currently available on the impacts of the all individual projects.

Lenovo reduced the use of packaging material per unit shipped, increased the use of recycled plastics in our products, reduced transportation miles incurred and improved reuse of packaging and shipping materials. Actions all of which ultimately result in lower carbon emissions.

Renewable Energy and Alternative Fuels

Lenovo has committed to install local renewable energy generation sources where technically and economically feasible. Hot water solar system was implemented on some buildings in Chinese facilities and solar lamps were installed for parking lot lights in Beijing. Furthermore, Lenovo has been exploring availability and feasibility of alternative fuel use and installation of solar photovoltaic and solar hot water renewable energy sources at sites worldwide.

Lenovo is pleased to purchase renewable energy to support our emission reduction commitments where actual direct energy reductions are not technically or economically feasible. Lenovo has contracted with NextEra Energy Resources to carbon balance a portion of its electricity and steam usage by purchasing Green-e Certified Renewable Energy Certificates (RECs) through the company’s innovative EarthEra program. Lenovo has initially committed to purchasing over 10 million kilowatt-hours of electricity per year for 3 years, which will help avoid over 15,000 metric tons of carbon dioxide. This is equivalent to greater than 20% of the carbon emissions associated with Lenovo’s purchased energy during FY 2009/10, or nearly 15 times the carbon emissions emanating directly from our operations. In addition, 100% of the proceeds from Lenovo’s purchase of RECs will be directed to the EarthEra Renewable Energy Trust and used by NextEra Energy Resources to build new renewable energy facilities in the United States.

Lenovo also has chosen to offset a part of reported direct emissions associated with emissions from operating own vehicles and burnt fuels on-site. Therefore, Lenovo purchased 3,000 US origin wind carbon offset credits from NextEra Energy Resources' emission reduction project in Texas, USA -- Capricorn Ridge Wind Energy Center -- which will help avoid 3,000 metric tons of carbon dioxide. It has been initially committed to purchase the same amount for FY 2010/11 and FY 2011/12.

For more information about the EarthEra renewable energy and carbon offset programs, visit www.earthera.com.

Energy Efficient Products

Lenovo’s historical and continued focus on product and operations energy efficiency provides a strong product differentiator in a market and regulatory environment that increasingly values these attributes. With a development process that places a premium on energy efficiency, an already outstanding offering of energy efficient IT products and internal processes in place to drive continued improvements in operational efficiency, Lenovo is well positioned to benefit from an increasing demand for energy efficient products with smaller carbon footprints.

Energy efficiency is a targeted attribute of the Lenovo product development process. Improvements in product energy efficiency are consistently part of our key environmental objectives and targets.

Lenovo PCs come with built-in energy-efficient tools and eco-friendly features that include:

• Power Manager™ — helps optimize energy used by a running machine and saves up to 69 percent on energy consumption per desktop, per year.

• Active Directory and LANDesk® — supports remote deployment of power schemes and global settings to allow administrators the ability to control and enforce ThinkPad® energy savings company-wide.

• Cisco EnergyWise software application — allows Cisco networks to control and perform energy management and enables customers to monitor, control and report on the energy use of building equipment and IT devices using a Cisco EnergyWise enabled network.

Lenovo recognizes that the existence of a universally accepted method for establishing product carbon footprint (PCF) will promote targeted product energy reduction actions and allow for product differentiation. To this end, Lenovo is engaged in the development of PCF protocols and tools with external partners. The company participates as a member of the Stakeholder Advisory Group for the World Resources Institute (WRI) & World Business Council for Sustainable Development's (WBCSD) development of the Product Accounting & Reporting Standard. Our Beijing Desktop Development group participated in the road test of this Standard.

Lenovo is also engaged with other members of the information and communication technology (ICT) industry, academia and ENERGY STAR® in the development of a tool to simplify and expedite determination of the PCF for ICT products through the Product Attribute Impact Algorithm (PAIA) project. It is hoped that this work will move the industry towards a standard method for establishing PCF. Lenovo's product development groups are currently in process of evaluating PAIA notebook PCF calculation tool and engaged in development of a tool for desktops and monitors.

Internally Lenovo continues to work on quantifying the lifetime impact of its products. The carbon footprint of Lenovo's products will help identify lifecycle areas where GHG emissions can be effectively reduced. An internal product carbon footprint calculation guidance has been developed to support quantifying the product life cycle GHG emissions of Lenovo's products. This document is written in accordance with ISO 14040 & 44 Environmental management – Life cycle assessment and consistent with Publicly Available Specification 2050, and Greenhouse Gas Protocol's Product Accounting & Reporting Standard. Each business unit must follow this guide in assessing the life cycle emissions of its products. Lenovo's climate change targets include establishing the PCF for at least one product from each product family during the current fiscal year. This work will be used to drive identification & evaluation of opportunities to reduce the PCF of Lenovo's products.

Supply Chain

Lenovo continues to participate with the Electronics Industry Citizenship Coalition's Environmental Sustainability Working Group in the development and implementation of a carbon/water reporting tool for measuring and reporting the carbon emissions and water usage of our supply chain. The carbon reporting system is used to gather primary data from key Tier 1 suppliers that are identified by the Lenovo's Global Supply Chain department and Global Environmental Affairs team. This year selection of Lenovo's suppliers has been based on percentage of production-related and non-production related suppliers total spend. Lenovo plans to engage with its key suppliers on carbon emission reductions opportunities once internal evaluation of suppliers' aggregated data is completed. As part of Lenovo's climate change strategy, an evaluation of potential supplier climate change performance and strategy will become a differentiator in the procurement process. Ultimately this will allow us to identify points in the chain where significant risks are created due to high level of GHG emissions. This will allow us to implement specific mitigation plans relative to those high risk areas.

Lenovo meets annually with its primary suppliers and shares strategies and requirements. During our most recent annual meeting suppliers were briefed on our efforts to establish product carbon footprints and their possible roles in supporting the process.

• Emissions related to product transportation – The establishment of Lenovo's product transportation metrics and tracking transportation emissions has been initiated. The product transportation baseline will be developed by 3/31/2012 and will include transportation and distribution of Lenovo's sold products for top transportation carriers between the point of sale and the end consumer including all related emissions that arise from air transport, rail transport, road transport, and marine transport.

• Emissions associated with employee commuting - Identifying data for employee commuting category including emissions from the transportation of employees between their homes and their worksites has been piloted at a local level in the Morrisville, NC site. The Morrisville's employee commute survey results were used as base for developing a first global commute survey which was distributed to all Lenovo's employee in May, 2011. Collected data showed that Lenovo's employees travelled almost 166 million miles in FY 2010/11. Lenovo is still evaluating this data and how we may use it to develop strategies which influence GHG emissions associated with employee commuting.

External Initiatives

Lenovo has committed to disclose greenhouse gas emissions and climate change strategies through the voluntary public reporting system - Carbon Disclosure Project (CDP). The company began participation in 2009 and has been reporting to two CDP programs: Investor CDP and the CDP supply chain. The Carbon Disclosure Project is an independent not-for-profit organization holding the largest database of primary corporate climate change information in the world. Thousands of organizations from across the world's major economies measure and disclose their greenhouse gas emissions and climate change strategies through CDP.

Lenovo supports the conclusions as presented by the Fourth Assessment Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC) - “Climate Change 2007”. Lenovo concurs with the findings and agrees that specific actions are needed to stabilize atmospheric GHG levels and hold global average temperatures to acceptable increases. The actions supported by Lenovo include the capping of global emissions by 2015, a 30% reduction in emissions from developed countries by 2020 (relative to year 1990 levels), and a 50% reduction in global emissions by 2050 (relative to year 1990 levels).

Lenovo is an associate member of the Climate Savers Computing Initiative (CSCI), a nonprofit organization composed of consumers, businesses, and conservation organizations that are dedicated to curbing PC related emissions and increasing PC power efficiency. Lenovo fully supports the goal of CSCI which is to promote the development, deployment and adoption of smart PC technologies that improve PC power efficiency and inactive state power consumption.

Lenovo as a member of Coalition for Energy and Environmental Leadership in Leased Space has been using Environmental and Energy Efficiency Attributes Checklist for an evaluation process for new leased building in areas of sustainable site management, water efficiency, energy efficiency and materials & resources.

Energy use calculations are based upon actual internal testing of Lenovo Desktops, Notebooks and Monitors. The calculation methodology assumes feature rich mainstream Lenovo hardware with the energy management features disabled operating 365 days per year. Transportation emissions calculations assume air freight shipment and maximum recorded distance from point of origin to destination for Lenovo products.